New Markets Tax Credit Program Receives Innovations Award

The U.S. Department of the Treasury’s New Markets Tax Credit (NMTC) Program was recently named one of the Top 50 Government Innovations that will advance to the final stages of competition for the prestigious 2009 Innovations in American Government Award. The NMTC Program, which is administered by Treasury’s Community Development Financial Institutions (CDFI) Fund, was chosen from more than 600 applicant programs representing all levels of government across the nation.

The award is endowed by the Ford Foundation and administered by the Ash Institute for Democratic Governance and Innovation at Harvard’s Kennedy School. The Innovations in American Government Program is a significant force in recognizing and promoting excellence and creativity in the public sector. Through its annual awards competition, the Innovations in American Government Program provide concrete evidence that government can work to improve the quality of life for citizens. By highlighting exemplary models of local, state, and federal governments’ innovative performance, the Innovations in American Government Program serves as a catalyst for continued progress in addressing the nation’s most pressing public concerns. It is administered by the Ash Institute for Democratic Governance and Innovation at Harvard’s Kennedy School.

The NMTC Program was created in December 2000 to provide tax incentives to induce private-sector, market-driven investment in businesses and real estate development projects located in low-income urban and rural communities across the nation. The NMTC Program is attracting critically needed private-sector capital to hard-to-finance but vital projects in the nation’s low-income communities. NMTC projects are diverse in nature with tangible community impacts, including: a manufacturing facility in rural Iowa that manufactures parts for wind turbines; an emergency worker training facility in Lafayette, LA, developed in the aftermath of Hurricane Katrina, which will train more than 240 students per year and provide more than 60 permanent jobs; a high tech business incubator in Detroit that will provide opportunities for women and minority-owned businesses; and the redevelopment of an abandoned factory site in San Diego that is providing its residents with not only with their first grocery store, but with the opportunity to build personal wealth through a unique community ownership strategy.

An additional $3 billion in allocation authority to the CDFI Fund was awarded through the stimulus bill which will enable it to award a total of $10 billion in New Markets Tax Credits through the 2008 and 2009 rounds of the program.

In addition to the leveraging of taxpayer resources, accountability to the public is an important aspect of the NMTC Program. Organizations that are selected through the merit-based application review must not only demonstrate that they are accountable to the communities they serve by including representatives from those communities on their governing or advisory boards, but they must also demonstrate their accountability to the American taxpayer. Organizations awarded New Markets Tax Credits must regularly report to the CDFI Fund the projects they are investing in, and they must meet certain financial and other performance goals or risk losing their allocation of tax credits. The CDFI Fund makes information on NMTC activities available to the public through annual reports made available to the public via its website.

Jose Villar named to head CDFI Fund as its Chief Operating Officer

The Community Development Financial Institutions (CDFI) Fund Director Donna J. Gambrell announced the appointment of José Villar to serve as the Chief Operating Officer (COO) of the CDFI Fund beginning Monday, March 30, 2009. As the COO, Villar will serve as the Director’s principal executive on CDFI Fund operations and program processes. He will be primarily responsible for managing the day-to-day activities at the CDFI Fund and ensuring that operational infrastructure can support enhanced business practices. Villar will serve as the lead management executive in developing operating procedures, internal policies and controls, and implementing both short-term and long-range strategic plans.

Prior to the CDFI Fund, Mr. Villar held several positions within the U.S. Department of the Treasury. Most recently, Mr. Villar served as the Director of the Office of Financial Management where he was responsible for managing the budget, accounting and procurement functions, and travel services for all of Treasury’s 32 program offices. As Director, he led his team to provide exceptional service to their Treasury customers by implementing best practices related to financial management. He also served as the Director of Business Operations for the HR Connect program office where he improved the program’s operations, reduced costs, instituted changes to fulfill Office of Management and Budget (OMB) requirements, and established policies and procedures for managing the business operations. HR Connect is the Treasury Department’s proprietary world-class human resource system.

In addition, Villar served at the Internal Revenue Service’s (IRS) Chief Financial Officer and Chief Information Officer Organizations. At IRS, he led project teams of federal employees and contractors to provide expert knowledge of federal financial management and of various OMB Circulars. Prior to working at the Treasury Department, Villar held several positions at the U.S. Department of Health and Human Services and at the U.S. Bureau of Labor Statistics. Villar holds Bachelor’s degrees in Economics and a Master’s degree in Commerce and Public Policy.

House Passes Grayson-Himes Legislation to Tie Pay to Performance for TARP Recipients

The U.S. House of Representatives approved legislation that would tie pay to performance at companies that have received direct capital investments under the Troubled Asset Relief Program. The Grayson-Himes Pay for Performance Act would prohibit certain compensation at these institutions to better align the public’s interest with the health of the financial institutions.

In addition, the bill also repeals a controversial provision in the American Recovery and Reinvestment Act that exempts bonuses due under employment contracts entered into or before February 11, 2009. The bill passed by a vote of 247-171.

Regardless of when a company entered into a compensation payment arrangement, recipients who have yet to repay a direct capital investment under TARP or the Housing and Economic Recovery Act (which covers Fannie Mae, Freddie Mac and the Federal Home Loan Banks) now would be prohibited from:

• Paying any executive or employee any compensation that is “unreasonable or excessive,” as defined in standards established by the Treasury Secretary.
• Paying any bonus or other supplemental payment that is not directly based on performance-based standards set by the Treasury Secretary.

The House also approved two amendments introduced by Dennis Cardoza (D-CA) and Melissa Bean (D-IL). The Cardoza amendment would allow the Treasury Secretary to exempt “community financial institutions,” institutions that receive or have received a direct capital investment under TARP of no more than $250 million. The Bean amendment would enable institutions that enter into a TARP payback schedule with Treasury on terms set by Treasury to no longer be subject to the bonus and compensation restrictions created by the Act. If an institution defaults it would be required to surrender to Treasury any compensation that would have been subject to the bill.

The bill would require the Treasury Secretary to consult with the Chairperson of the Congressional Oversight Panel and obtain approval of the agencies that are members of the Federal Financial Institutions Examination Council before defining unreasonable or excessive compensation and establishing performance-based measures.

Finally, the bill would require a financial institution that is subject to the new compensation requirements to submit an annual report to the Treasury Secretary stating how many executives and employees received or will receive total compensation above specified dollar amounts during the fiscal year.